Cover
Cover - shares | 6 Months Ended | |
Mar. 31, 2023 | Apr. 28, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-35840 | |
Entity Registrant Name | Model N, Inc. | |
Entity Incorporation, State | DE | |
Entity Tax Identification Number | 77-0528806 | |
Entity Address, Street Address | 777 Mariners Island Boulevard, | |
Entity Address, Suite | Suite 300 | |
Entity Address, City | San Mateo, | |
Entity Address, State | CA | |
Entity Address, Postal Zip Code | 94404 | |
City Area Code | 650 | |
Local Phone Number | 610-4600 | |
Title of each class | Common Stock, par value $0.00015 per share | |
Trading Symbol | MODN | |
Name of each exchange on which registered | NYSE | |
Entity Current Filing Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 38,106,970 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001118417 | |
Current Fiscal Year End Date | --09-30 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2023 | Sep. 30, 2022 |
Current assets | ||
Cash and cash equivalents | $ 270,643 | $ 193,524 |
Funds held for customers | 229 | 603 |
Accounts receivable, net of allowance for credit losses of $418 as of March 31, 2023 and $102 as of September 30, 2022 | 76,021 | 49,121 |
Prepaid expenses | 3,648 | 5,772 |
Other current assets | 7,709 | 12,516 |
Total current assets | 358,250 | 261,536 |
Property and equipment, net | 1,422 | 1,838 |
Operating lease right-of-use assets | 12,117 | 15,392 |
Goodwill | 65,665 | 65,665 |
Intangible assets, net | 33,628 | 37,362 |
Other assets | 9,710 | 10,454 |
Total assets | 480,792 | 392,247 |
Current liabilities | ||
Accounts payable | 4,610 | 5,820 |
Customer funds payable | 241 | 603 |
Accrued employee compensation | 11,758 | 26,712 |
Accrued liabilities | 4,849 | 6,860 |
Operating lease liabilities, current portion | 4,606 | 4,651 |
Deferred revenue, current portion | 70,792 | 62,282 |
Total current liabilities | 96,856 | 106,928 |
Long term debt | 279,477 | 135,417 |
Operating lease liabilities, less current portion | 8,895 | 12,142 |
Other long-term liabilities | 3,403 | 3,139 |
Total liabilities | 388,631 | 257,626 |
Commitments and contingencies | ||
Stockholders’ equity | ||
Common Stock, $0.00015 par value; 200,000 shares authorized; 38,106 and 37,358 shares issued and outstanding at March 31, 2023 and September 30, 2022, respectively | 6 | 6 |
Preferred Stock, $0.00015 par value; 5,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Additional paid-in capital | 394,622 | 421,473 |
Accumulated other comprehensive loss | (2,160) | (2,413) |
Accumulated deficit | (300,307) | (284,445) |
Total stockholders’ equity | 92,161 | 134,621 |
Total liabilities and stockholders’ equity | $ 480,792 | $ 392,247 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Sep. 30, 2022 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 418 | $ 102 |
Common Stock, par value (in dollars per share) | $ 0.00015 | $ 0.00015 |
Common Stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common Stock, shares issued (in shares) | 38,106,000 | 37,358,000 |
Common Stock, shares outstanding (in shares) | 38,106,000 | 37,358,000 |
Preferred Stock, par value (in dollars per share) | $ 0.00015 | $ 0.00015 |
Preferred Stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred Stock, shares issued (in shares) | 0 | 0 |
Preferred Stock, shares outstanding (in shares) | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Revenues | ||||
Total revenues | $ 62,604 | $ 53,280 | $ 121,758 | $ 104,822 |
Cost of revenues | ||||
Total cost of revenues | 27,620 | 24,051 | 53,891 | 46,702 |
Gross profit | 34,984 | 29,229 | 67,867 | 58,120 |
Operating expenses | ||||
Research and development | 12,403 | 11,811 | 25,167 | 23,238 |
Sales and marketing | 14,222 | 12,039 | 27,199 | 23,078 |
General and administrative | 11,481 | 9,322 | 22,172 | 17,761 |
Total operating expenses | 38,106 | 33,172 | 74,538 | 64,077 |
Loss from operations | (3,122) | (3,943) | (6,671) | (5,957) |
Interest expense (income), net | (281) | 3,848 | (147) | 7,626 |
Loss on extinguishment of debt | 29,493 | 0 | 29,493 | 0 |
Other expenses (income), net | 83 | (112) | 18 | (12) |
Loss before income taxes | (32,417) | (7,679) | (36,035) | (13,571) |
Provision for income taxes | 902 | 360 | 1,334 | 734 |
Net loss | $ (33,319) | $ (8,039) | $ (37,369) | $ (14,305) |
Net loss per share attributable to common stockholders: | ||||
Basic (in dollars per share) | $ (0.88) | $ (0.22) | $ (0.99) | $ (0.39) |
Diluted (in dollars per share) | $ (0.88) | $ (0.22) | $ (0.99) | $ (0.39) |
Weighted average number of shares used in computing net loss per share attributable to common stockholders: | ||||
Basic (in shares) | 37,917 | 36,619 | 37,719 | 36,419 |
Diluted (in shares) | 37,917 | 36,619 | 37,719 | 36,419 |
Subscription | ||||
Revenues | ||||
Total revenues | $ 44,925 | $ 38,243 | $ 89,139 | $ 76,331 |
Cost of revenues | ||||
Total cost of revenues | 16,121 | 14,464 | 31,727 | 28,380 |
Professional services | ||||
Revenues | ||||
Total revenues | 17,679 | 15,037 | 32,619 | 28,491 |
Cost of revenues | ||||
Total cost of revenues | $ 11,499 | $ 9,587 | $ 22,164 | $ 18,322 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (33,319) | $ (8,039) | $ (37,369) | $ (14,305) |
Other comprehensive gain (loss), net of tax | ||||
Unrealized gain (loss) on cash flow hedges | 0 | (104) | 239 | (135) |
Change in unrealized gain (loss) on investments | (18) | 0 | 8 | 0 |
Change in foreign currency translation gain (loss) | 72 | (180) | 6 | (162) |
Total comprehensive loss | $ (33,265) | $ (8,323) | $ (37,116) | $ (14,602) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities | ||
Net loss | $ (37,369) | $ (14,305) |
Adjustments to reconcile net loss to net cash provided by operating activities | ||
Depreciation and amortization | 4,262 | 4,479 |
Stock-based compensation | 20,767 | 15,308 |
Amortization of debt discount and issuance costs | 629 | 5,391 |
Loss on extinguishment of debt | 29,493 | 0 |
Deferred income taxes | (156) | 280 |
Amortization of capitalized contract acquisition costs | 2,416 | 2,027 |
Other non-cash charges | 1,077 | 32 |
Changes in assets and liabilities, net of acquisition | ||
Accounts receivable | (27,963) | (4,682) |
Prepaid expenses and other assets | 8,471 | 2,614 |
Accounts payable | (1,300) | (729) |
Accrued employee compensation | (9,890) | (5,517) |
Other current and long-term liabilities | (5,150) | (1,707) |
Deferred revenue | 8,563 | (263) |
Net cash provided by (used in) operating activities | (6,150) | 2,928 |
Cash flows from investing activities | ||
Purchases of property and equipment | (106) | (349) |
Net cash used in investing activities | (106) | (349) |
Cash flows from financing activities | ||
Proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan | 2,555 | 2,401 |
Proceeds from issuance of 2028 Notes | 253,000 | 0 |
Payment of debt issuance cost for Notes 2028 | (6,958) | 0 |
Repayments of 2025 Notes | (165,210) | 0 |
Net changes in customer funds payable | (374) | (233) |
Net cash provided by financing activities | 83,013 | 2,168 |
Effect of exchange rate changes on cash and cash equivalents | (12) | 10 |
Net decrease in cash and cash equivalents | 76,745 | 4,757 |
Cash and cash equivalents | ||
Beginning of period | 194,127 | 165,783 |
End of period | $ 270,872 | $ 170,540 |
The Company and Significant Acc
The Company and Significant Accounting Policies and Estimates | 6 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company and Significant Accounting Policies and Estimates | The Company and Significant Accounting Policies and Estimates Model N, Inc. (“Model N,” “we,” “us,” “our,” and “the Company”) was incorporated in Delaware on December 14, 1999. The Company is a provider of cloud revenue management solutions for the life sciences and high tech industries. The Company’s software and business services enable its customers to maximize revenues and reduce revenue compliance risk by transforming their revenue life cycle from a series of tactical, disjointed operations into a strategic end-to-end process, which enables them to manage the strategy and execution of pricing, contracting, incentives and rebates. The Company’s corporate headquarters are located in San Mateo, California, with additional offices in the United States, India and Switzerland. Fiscal Year The Company’s fiscal year ends on September 30. References to fiscal year 2023, for example, refer to the fiscal year ending September 30, 2023. Basis for Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The unaudited condensed consolidated balance sheet as of September 30, 2022 has been derived from the audited financial statements which are included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022 (the ‘Annual Report”) on file with the SEC. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Annual Report. In the opinion of management, the unaudited interim consolidated financial statements include all the normal recurring adjustments necessary to present fairly our condensed consolidated financial statements. The results of operations for the six months ended March 31, 2023 are not necessarily indicative of the operating results for the full fiscal year 2023 or any future periods. The condensed consolidated financial statements include the accounts of Model N and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities and reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates include revenue recognition, liability and equity allocation of convertible senior notes, legal contingencies, income taxes, stock-based compensation and valuation of goodwill and intangibles. These estimates and assumptions are based on management’s best estimates and judgment. Management regularly evaluates its estimates and assumptions using historical experience and other factors. However, actual results could differ significantly from these estimates. New Accounting Pronouncements Recently Adopted Accounting Guidance In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes, which removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted. The Company adopted this guidance in the first quarter of fiscal year 2022 and it did not have a material impact on the condensed consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impacted the diluted EPS computation. The Company adopted this ASU on October 1, 2022 on a modified retrospective basis. As a result, the Company no longer separately presents in equity an embedded conversion feature for such debt. Similarly, the discount is no longer amortized into income as interest expense over the life of the instrument. The cumulative effect of the ASU adoption was as follows (in thousands): Balance at September 30, 2022 Adjustments from Adoption of ASU 2020-06 Balance at October 1, 2022 Liabilities Long term debt $ 135,417 $ 33,720 $ 169,137 Stockholders’ Equity Additional paid-in capital 421,473 (55,227) 366,246 Accumulated deficit (284,445) 21,507 (262,938) Recently Issued Accounting Pronouncements Not Yet Adopted In October 2021, the FASB issued Accounting Standards Update No. 2021-08, “Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”), which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured in accordance with ASC 606, Revenue from Contracts with Customers. ASU 2021-08 is effective for interim and annual periods beginning after December 15, 2022 on a prospective basis, with early adoption permitted. The Company does not anticipate the impact of the adoption of this standard to be material to its consolidated financial statements. Significant Accounting Policies There have been no changes in the significant accounting policies from those that were disclosed in the audited consolidated financial statements for the fiscal year ended September 30, 2022 included in the Annual Report on Form 10-K. |
Revenues from Contracts with Cu
Revenues from Contracts with Customers | 6 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenues from Contracts with Customers | Revenues from Contracts with Customers Revenue Recognition The Company derives revenues primarily from subscription revenues and professional services revenues. Revenues are recorded at a net basis which exclude sales taxes that are collected from customers. Disaggregation of Revenues See Note 14, Geographic Information, for information on revenue by geography. Customer Contract Balances The following table reflects contract balances related to contracts with customers (in thousands): As of March 31, 2023 As of September 30, 2022 Accounts receivable, net $ 66,626 $ 35,095 Unbilled accounts receivable, net 9,395 14,026 Total accounts receivable, net $ 76,021 $ 49,121 Contract asset $ 2,773 $ 7,671 Deferred revenue $ 71,212 $ 62,649 Capitalized contract acquisition costs $ 12,308 $ 13,041 Accounts Receivable Accounts receivable represents the Company’s right to consideration that is unconditional, net of allowances for credit losses. The allowance for credit losses is based on management’s assessment of the collectability of accounts receivable amounts. Unbilled Accounts Receivable Unbilled accounts receivable consists of a receivable primarily for the revenue recognized for services performed but not yet billed. Contract Asset Contract asset represents revenue that has been recognized for satisfied performance obligations for which the Company does not have an unconditional right to consideration. Deferred Revenue Deferred revenue, which is a contract liability, consists of amounts that have been invoiced and for which the Company has the right to bill, but that have not been recognized as revenue because the related goods or services have not been transferred. The non-current portion of deferred revenue is included in other long-term liabilities in the condensed consolidated balance sheets. During the three and six months ended March 31, 2023, the Company recognized revenue of $28.4 million and $45.8 million, respectively, that was included in the deferred revenue balances at the beginning of the periods. During the three and six months ended March 31, 2022, the Company recognized revenue of $26.9 million and $40.9 million, respectively, that was included in the deferred revenue balances at the beginning of the periods. Capitalized Contract Acquisition Costs The Company capitalizes incremental costs incurred to acquire contracts with customers, primarily sales commissions, for which the associated revenue is expected to be recognized in future periods. The Company incurs these costs in connection with both initial contracts and renewals. Such costs for renewals are not considered commensurate with those for initial contracts given the substantive difference in commission rates in proportion to their respective contract values. The costs in connection with initial contracts and renewals are deferred and amortized over an expected customer life of five years and over the renewal term, respectively, which corresponds to the period of benefit to the customer. The Company determined the period of benefit by considering the Company’s history of customer relationships, length of customer contracts, technological development and obsolescence, and other factors. The current and non-current portion of capitalized contract acquisition costs are included in other current assets and other assets on the condensed consolidated balance sheets. Amortization expense is included in sales and marketing expenses on the condensed consolidated statements of operations. As of March 31, 2023, the current and non-current portions of capitalized contract acquisition costs were $4.4 million and $7.9 million, respectively. As of September 30, 2022, the current and non-current portions of capitalized contract acquisition costs were $4.4 million and $8.6 million, respectively. The Company amortized $1.2 million and $2.4 million of contract acquisition costs during the three and six months ended March 31, 2023, respectively. The Company amortized $1.0 million and $2.0 million of contract acquisition costs during the three and six months ended March 31, 2022, respectively. For the three and six months ended March 31, 2023 and 2022, there was no impairment related to capitalized contract acquisition costs. Customer Deposits Customer deposits primarily relate to payments received from customers which could be refundable pursuant to the terms of the related arrangement. These amounts are included in accrued liabilities on the condensed consolidated balance sheets. Customer deposits were immaterial as of March 31, 2023 and September 30, 2022. Standard payment terms to customers generally range from thirty to ninety days; however, payment terms and conditions in our customer contracts may vary. In some cases, customers prepay for subscription and services in advance of the delivery; in other cases, payment is due as services are performed or in arrears following the delivery. Remaining Performance Obligations Remaining performance obligations represent non-cancelable contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. As of March 31, 2023, the aggregate amount of the transaction price allocated to performance obligations either unsatisfied or partially unsatisfied was $338.4 million, 43% of which we expect to recognize as revenue over the next 12 months and the remainder thereafter. |
Leases
Leases | 6 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Leases | Leases The Company leases facilities under noncancellable operating leases with lease terms between three years and eleven years. Certain leases include options to extend or terminate the lease. The Company factored into the determination of lease payments the options that it is reasonably certain to exercise. Operating lease costs were $1.2 million and $2.5 million for the three and six months ended March 31, 2023, respectively, and $1.4 million and $2.9 million for the three and six months ended March 31, 2022, respectively. Short-term lease costs, variable lease costs, and sublease income were immaterial for the three and six months ended March 31, 2023 and 2022. Cash flow information related to operating leases is as follows (in thousands): Six Months Ended March 31, 2023 Six Months Ended March 31, 2022 Cash paid for amounts included in the measurement of operating lease liabilities $ 2,393 $ 2,540 Operating lease ROU assets obtained in exchange for new operating lease liabilities — — The weighted-average remaining lease term is 3 years and the weighted-average discount rate is 2.7% as of March 31, 2023. Maturities of operating lease liabilities as of March 31, 2023 are as follows (in thousands): Fiscal Year Remaining fiscal 2023 $ 2,463 2024 4,661 2025 4,296 2026 2,357 2027 276 2028 and thereafter — Total operating lease payments 14,053 Less imputed interest 552 Total operating lease liabilities $ 13,501 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist primarily of cash and cash equivalents, funds held for customers, accounts receivable, accounts payable, customer funds payable, debt and certain accrued liabilities. The Company regularly reviews its financial instruments portfolio to identify and evaluate such instruments that have indications of possible impairment. The Company estimates the fair value of its financial instruments when there is no readily available market data, which involves some level of management estimation and judgment and may not necessarily represent the amounts that could be realized in a current or future sale of these assets. The table below sets forth the Company’s marketable securities which are measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands): Reported as: Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents As of March 31, 2023 Level 1: Money market funds $ 103,328 $ — $ — $ 103,328 $ 103,328 US Treasury securities 34,979 8 — 34,987 34,987 Total $ 138,307 $ 8 $ — $ 138,315 $ 138,315 As of September 30, 2022 Level 1: Money market funds $ 61,956 $ — $ — $ 61,956 $ 61,956 US Treasury securities 89,679 11 (6) 89,684 89,684 Total $ 151,635 $ 11 $ (6) $ 151,640 $ 151,640 The Company’s financial instruments not measured at fair value on a recurring basis include cash, funds held for customers, accounts receivable, accounts payable, customer funds payable, convertible senior notes and certain accrued liabilities. These financial instruments are reflected in the financial statements at cost and approximate their fair value due to their short-term nature. See Note 7 for the fair value measurement of the Company’s derivative contracts and Note 8 for the fair value measurement of the Company’s convertible senior notes. |
Goodwill, and Intangible Assets
Goodwill, and Intangible Assets | 6 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill, and Intangible Assets | Goodwill, and Intangible AssetsGoodwill The following table summarizes the changes in the carrying amount of goodwill (in thousands): Balance at September 30, 2022 $ 65,665 Additions — Balance at March 31, 2023 $ 65,665 Intangible Assets Intangible assets consisted of the following (in thousands): Estimated As of March 31, 2023 Useful Life Gross Carrying Accumulated Net Carrying Intangible Assets: Customer relationships 3-15 $ 52,109 $ (25,980) $ 26,129 Developed technology 5-6 22,333 (15,927) 6,406 Non-compete agreements 5 1,600 (720) 880 Trade name 3 850 (637) 213 Total $ 76,892 $ (43,264) $ 33,628 Estimated As of September 30, 2022 Useful Life Gross Carrying Accumulated Net Carrying Intangible Assets: Customer relationships 3-15 $ 52,109 $ (23,684) $ 28,425 Developed technology 5-6 22,333 (14,790) 7,543 Non-compete agreements 5 1,600 (560) 1,040 Trade name 3 850 (496) 354 Total $ 76,892 $ (39,530) $ 37,362 The Company recorded amortization expense related to acquired intangible assets of $1.7 million and $3.7 million for the three and six months ended March 31, 2023, respectively, and $2 million and $4 million for the three and six months ended March 31, 2022, respectively. Estimated future amortization expense for the intangible assets as of March 31, 2023 is as follows (in thousands): Fiscal Year Remaining fiscal 2023 $ 3,452 2024 6,691 2025 6,620 2026 6,069 2027 2,266 2028 and thereafter 8,530 Total future amortization $ 33,628 |
Cash, Cash Equivalents, and Fun
Cash, Cash Equivalents, and Funds Held for Customers | 6 Months Ended |
Mar. 31, 2023 | |
Cash and Cash Equivalents [Abstract] | |
Cash, Cash Equivalents, and Funds Held for Customers | Cash, Cash Equivalents, and Funds Held for Customers The Company has contractual obligations to remit funds to various third parties on behalf of customers to which the Company provides payment processing services. Funds received from these customers represent cash and cash equivalents and are reflected in the “Funds held for customers” line item on the condensed consolidated balance sheets. The table below reconciles the cash and cash equivalents and funds held for customers as reported on the condensed consolidated balance sheets to the cash and cash equivalents on the condensed consolidated statements of cash flows (in thousands): As of March 31, 2023 As of September 30, 2022 Cash and cash equivalents $ 270,643 $ 193,524 Funds held for customers 229 603 Total cash and cash equivalents $ 270,872 $ 194,127 |
Derivative Instruments and Hedg
Derivative Instruments and Hedging | 6 Months Ended |
Mar. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging | Derivative Instruments and Hedging The Company uses foreign currency forward contracts to hedge a portion of the forecasted foreign currency-denominated expenses incurred in the normal course of business. These contracts are designated as cash flows hedges. These hedging contracts reduce, but do not entirely eliminate, the impact of adverse foreign exchange rate movements. The Company does not use any of the derivative instruments for trading or speculative purposes. These contracts have maturities of 12 months or less. The Company records changes in the fair value of cash flow hedges in accumulated other comprehensive loss in the condensed consolidated balance sheets, until the forecasted transaction occurs, at which point, the related gain or loss on the cash flow hedge is reclassified to the financial statement line item to which the derivative relates. The amounts reclassified to expenses related to the hedged transactions were immaterial for the periods presented. The fair value of the outstanding non-deliverable foreign currency forward contracts was measured using Level 2 fair value inputs and was immaterial as of September 30, 2022. The Company had no outstanding non-deliverable foreign currency forward contracts as of March 31, 2023. Notional Amounts of Derivative Contracts |
Convertible Senior Notes
Convertible Senior Notes | 6 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Convertible Senior Notes | Convertible Senior Notes In May 2020, the Company issued $172.5 million aggregate principal amount of 2.625% convertible senior notes due in 2025 (the “2025 Notes”). In March 2023, the Company issued $253.0 million aggregate principal amount of 1.875% convertible senior notes due in 2028 (the “2028 Notes”, and together with the 2025 Notes the “Convertible Senior Notes”). Each series of the Convertible Senior Notes is governed by an indenture between the Company, as the issuer, and U.S. Bank National Association, as Trustee (individually, each an “Indenture,” and together, the “Indentures”). The applicable Indenture governing each series of the convertible senior notes does not contain any financial covenants or any restrictions on the payment of dividends, the occurrence of senior debt or other indebtedness, or the issuance or repurchase of the Company's other securities by the Company. In May 2020, the Company issued $172.5 million aggregate principal amount of 2025 Notes in a private placement, including $22.5 million which represents the exercise in full of the initial purchasers’ option to purchase additional notes. The net proceeds from the issuance of the 2025 Notes was $166.4 million, net of initial purchasers’ discounts and debt issuance costs of $6.1 million. The Company used $40.0 million of the net proceeds to repay in full the debt outstanding under, and terminated the Credit Agreement dated May 4, 2018, as amended, by and among the Company, Wells Fargo, as administrative agent, and the lenders party thereto. The 2025 Notes are senior, unsecured obligations of the Company and bear an interest rate of 2.625% per year payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2020. The 2025 Notes mature on June 1, 2025 unless repurchased, redeemed or converted in accordance with their terms prior to such date. Pursuant to the term of the Indenture, the 2025 Notes are convertible into cash, shares of the Company’s common stock or a combination thereof, at the Company’s election, at an initial conversion rate of 30.0044 shares of common stock per $1,000 principal amount of the 2025 Notes, which is equal to an initial conversion price of approximately $33.33 per share of common stock subject to adjustment for standard anti-dilution provision and the make-whole feature described below. During the second quarter of fiscal 2023, the Company made an irrevocable election to settle the principal amount of the 2025 Notes using Combination Settlement (as defined in the applicable Indenture). Generally, under this settlement method, the conversion value will be settled in cash in an amount up to the principal amount being converted, and any excess of the conversion value over the principal amount will be settled, at the Company’s election, in cash or shares of the Company’s common stock. Prior to the close of business on the scheduled trading day immediately preceding March 1, 2025, holders of the 2025 Notes may convert all or a portion of their 2025 Notes in multiples of $1,000 principal amount, only under the following circumstances: • during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; • during the five five • if the Company calls any or all of the 2025 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or • upon the occurrence of specified corporate events. On or after March 1, 2025 and prior to the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the 2025 Notes may convert all or a portion of their 2025 Notes in multiples of $1,000 principal amount regardless of the foregoing conditions. Holders of the 2025 Notes who convert their 2025 Notes in connection with a make-whole fundamental change (as defined in the applicable Indenture) or in connection with any optional redemption are, under certain circumstances, entitled to an increase in the conversion rate with a maximum conversion rate of 38.2555 share of common stock per $1,000 principal amount of the 2025 Notes. Additionally, in the event of a fundamental change (as defined in the applicable Indenture), holders of the 2025 Notes may require the Company to repurchase all or a portion of their 2025 Notes at a price equal to 100% of the principal amount of 2025 Notes, plus any accrued and unpaid interest to, but excluding, the repurchase date. The Company may not redeem the 2025 Notes prior to June 6, 2023. The Company may redeem for cash all or part of the 2025 Notes, at its option, on or after June 6, 2023 and on or before the 41st scheduled trading day immediately before the maturity date, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption. No sinking fund is provided for the 2025 Notes. In initial accounting for the issuance of the 2025 Notes prior to the adoption of ASU 2020-06 on October 1, 2022, the Company separated the 2025 Notes into liability and equity components. The carrying amount of the liability component of $115.3 million was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was $57.2 million and was determined by deducting the fair value of the liability component from the principal amount of the 2025 Notes. The excess of the principal amount of the 2025 Notes over the carrying amount of the liability component represent a debt discount that was amortized to interest expense at an effective interest rate over the contractual terms of the 2025 Notes. The equity component was recorded in additional paid-in capital and is not remeasured as long as it continues to meet the conditions for equity classification. In initial accounting for the issuance costs related to the 2025 Notes prior to the adoption of ASU 2020-06 on October 1, 2022, the Company allocated the total amount incurred to the liability and equity components of the 2025 Notes based on the proportion of the proceeds allocated to the debt and equity components. Issuance costs attributable to the liability component were $4.1 million and are amortized to interest expense using the effective interest method over the contractual terms of the 2025 Notes. Issuance costs attributable to the equity component of $2.0 million were netted with the equity component in stockholders’ equity. As a result of the adoption of ASU 2020-06 on October 1, 2022, the Company no longer separately presents in equity an embedded conversion feature for such debt. Similarly, the debt discount, which was equal to the carrying value of the embedded conversion feature upon issuance, is no longer amortized into income as interest expense over the life of the instrument. For the impact of adoption see Note 1 to Condensed Consolidated Financial Statements. In March 2023, the Company issued $253.0 million aggregate principal amount of 2028 Notes in a private placement, including $33.0 million which represents the exercise in full of the initial purchasers’ option to purchase additional notes. The net proceeds from the issuance of the 2028 Notes was $245.5 million, net of initial purchasers’ discounts and debt issuance costs of $7.6 million. The Company used $165.2 million of the net proceeds from this issuance to repurchase approximately $138.0 million in aggregate principal amount of its 2025 Notes concurrently with the issuance. The repurchase of the 2025 Notes was accounted for as a debt extinguishment. The Company recorded a $29.5 million loss on extinguishment of debt on its consolidated statements of operations during the fiscal quarter ended March 31, 2023, which includes a write-off of related deferred issuance costs of $2.3 million. After giving effect to the repurchase, the total remaining principal amount outstanding under the 2025 Notes as of March 31, 2023 was $34.5 million. The 2028 Notes are senior, unsecured obligations of the Company and bear an interest rate of 1.875% per year payable semi-annually in arrears on September 15 and March 15 of each year, beginning on September 15, 2023. The Notes mature on March 15, 2028 unless repurchased, redeemed or converted in accordance with their terms prior to such date. The 2028 Notes are convertible into cash, shares of the Company’s common stock or a combination thereof, at the Company’s election, at an initial conversion rate of 23.2364 shares of common stock per $1,000 principal amount of the 2028 Notes, which is equal to an initial conversion price of approximately $43.04 per share of common stock subject to adjustment, with a maximum conversion rate of 30.7881. The conversion value will be settled in cash in an amount no less than the principal amount being converted, and any excess of the conversion value over the principal amount will be settled, at the Company’s election, in cash or shares of the Company’s common stock. Prior to the close of business on the scheduled trading day immediately preceding December 15, 2027, holders of the 2028 Notes may convert all or a portion of their 2028 Notes in multiples of $1,000 principal amount, only under the following circumstances: • during any calendar quarter commencing after the calendar quarter ending on June 30, 2023 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; • during the five five • if the Company calls any or all of the 2028 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or • upon the occurrence of specified corporate events. On or after December 15, 2027 and prior to the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the 2028 Notes may convert all or a portion of their Notes in multiples of $1,000 principal amount regardless of the foregoing conditions. Holders of the 2028 Notes who convert their 2028 Notes in connection with a make-whole fundamental change (as defined in the applicable Indenture) or in connection with any optional redemption are, under certain circumstances, entitled to an increase in the conversion rate. Additionally, in the event of a fundamental change (as defined in the applicable Indenture), holders of the 2028 Notes may require the Company to repurchase all or a portion of their 2028 Notes at a price equal to 100% of the principal amount of 2028 Notes, plus any accrued and unpaid interest to, but excluding, the repurchase date. The Company may not redeem the 2028 Notes prior to March 20, 2026. The Company may redeem for cash all or part of the 2028 Notes, at its option, on or after March 20, 2026 and on or before the 41st scheduled trading day immediately before the maturity date, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption. No sinking fund is provided for the 2028 Notes. The Company intends to use the remaining net proceeds from the issuance of 2028 Notes for general corporate purposes, including working capital and to fund growth and potential strategic projects. During the three months ended March 31, 2023, the conditions allowing holders of the Convertible Senior Notes to convert were not met. The Convertible Senior Notes were classified as long-term debt on the condensed consolidated balance sheets as of March 31, 2023. In accordance with ASU 2020-06, the 2028 Notes are accounted for as a single liability. The net carrying amounts of the liability and equity components for the 2025 Notes were as follows (in thousands): As of March 31, 2023 As of September 30, 2022 Liability component: Principal amount $ 34,530 $ 172,500 Unamortized discount — (34,354) Unamortized issuance costs (552) (2,729) Net carrying amount $ 33,978 $ 135,417 Equity component, net of issuance costs $ — $ 55,227 The net carrying amounts of the liability for the 2028 Notes were as follows (in thousands): As of March 31, 2023 As of September 30, 2022 Liability component: Principal amount $ 253,000 $ — Unamortized issuance costs (7,501) — Net carrying amount $ 245,499 $ — The following table sets forth the interest expense recognized related to the Convertible Senior Notes (in thousands): Three Months Ended March 31, Six Months Ended March 31, 2023 2022 2023 2022 Coupon interest expense $ 1,181 $ 1,132 $ 2,313 $ 2,264 Amortization of debt discount — 2,575 — 5,079 Amortization of debt issuance costs 327 161 629 312 Total interest expense related to the Notes $ 1,508 $ 3,868 $ 2,942 $ 7,655 The issuance costs related to the 2025 Notes and the 2028 Notes are being amortized to interest expense over the respective contractual term, at effective interest rates of 3.4% and 2.5%, respectively. As of March 31, 2023 unamortized debt issuance costs will be amortized over the remaining life of the 2025 Notes and the 2028 Notes which is approximately 26 months, and 60 months, respectively. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity The following tables present the changes in the components of stockholders’ equity (in thousands): Three Months Ended March 31, 2023 Common Stock Additional Accumulated Accumulated Deficit Total Shares Amount Balance at December 31, 2022 37,734 $ 6 $ 381,733 $ (2,214) $ (266,988) $ 112,537 Issuance of common stock upon exercise of stock options 2 — 27 — — 27 Issuance of common stock upon release of restricted stock units 274 — — — — — Issuance of common stock upon ESPP purchase 96 — 2,500 — — 2,500 Stock-based compensation — — 10,362 — — 10,362 Other comprehensive income — — — 54 — 54 Net loss — — — — (33,319) (33,319) Balance at March 31, 2023 38,106 6 394,622 (2,160) (300,307) 92,161 Three Months Ended March 31, 2022 Common Stock Additional Accumulated Accumulated Deficit Total Shares Amount Balance at December 31, 2021 $ 36,433 $ 5 $ 393,278 $ (1,218) $ (262,076) $ 129,989 Issuance of common stock upon exercise of stock options — — 8 — — 8 Issuance of common stock upon release of restricted stock units 275 1 — — — 1 Issuance of common stock upon ESPP purchase 108 — 2,321 — — 2,321 Stock-based compensation — — 7,932 — — 7,932 Other comprehensive loss — — — (284) — (284) Net loss — — — — (8,039) (8,039) Balance at March 31, 2022 36,816 $ 6 $ 403,539 $ (1,502) $ (270,115) $ 131,928 Six Months Ended March 31, 2023 Common Stock Additional Accumulated Accumulated Deficit Total Shares Amount Balance at September 30, 2022 37,358 $ 6 $ 421,473 $ (2,413) $ (284,445) $ 134,621 Cumulative effect of ASU 2020-06 adoption — — (55,227) — 21,507 (33,720) Balance at October 1, 2022 37,358 6 366,246 (2,413) (262,938) 100,901 Issuance of common stock upon exercise of stock options 4 — 54 — — 54 Issuance of common stock upon release of restricted stock units 648 — — — — — Issuance of common stock upon ESPP purchase 96 — 2,500 — — 2,500 Stock-based compensation — — 25,822 — — 25,822 Other comprehensive income — — — 253 — 253 Net loss — — — — (37,369) (37,369) Balance at March 31, 2023 38,106 $ 6 $ 394,622 $ (2,160) $ (300,307) $ 92,161 Six Months Ended March 31, 2022 Common Stock Additional Accumulated Accumulated Deficit Total Shares Amount Balance at September 30, 2021 36,059 $ 5 $ 380,528 $ (1,205) $ (255,810) $ 123,518 Issuance of common stock upon exercise of stock options 8 — 80 — — 80 Issuance of common stock upon release of restricted stock units 641 1 — — — 1 Issuance of common stock upon ESPP purchase 108 — 2,321 — — 2,321 Stock-based compensation — — 20,610 — — 20,610 Other comprehensive loss — — — (297) — (297) Net loss — — — — (14,305) (14,305) Balance at March 31, 2022 36,816 $ 6 $ 403,539 $ (1,502) $ (270,115) $ 131,928 For the six months ended March 31, 2023, additional paid-in capital included $5.1 million, related to restricted stock unit (“RSU”) grants for the portion of the bonus recorded as stock-based compensation for the year ended September 30, 2022. For the six months ended March 31, 2022, additional paid-in capital included $5.4 million, related to RSU grants for the portion of the bonus recorded as stock-based compensation for the year ended September 30, 2021. |
Stock-based Compensation
Stock-based Compensation | 6 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-based Compensation | Stock-based CompensationAs of March 31, 2023, the Company had approximately 4.4 million shares available for future stock awards under its equity plans and any additional releases resulting from an over-achievement relating to performance-based restricted stock units. The following table summarizes our RSU activity which includes performance-based RSUs under all equity plans for the six months ended March 31, 2023: Restricted Weighted Balance at September 30, 2022 2,055 $ 33.08 Granted 1,301 38.01 Released (648) 32.43 Forfeited (50) 32.01 Balance at March 31, 2023 2,658 $ 35.67 Stock-based compensation recorded in the condensed consolidated statements of operations is as follows (in thousands): Three Months Ended March 31, Six Months Ended March 31, 2023 2022 2023 2022 Cost of revenues Subscription $ 1,307 $ 1,065 $ 2,644 $ 1,923 Professional services 1,063 871 2,203 1,492 Total stock-based compensation in cost of revenues 2,370 1,936 4,847 3,415 Operating expenses Research and development 1,831 1,509 3,653 2,790 Sales and marketing 2,561 1,826 4,949 3,446 General and administrative 3,600 3,051 7,318 5,657 Total stock-based compensation in operating expenses 7,992 6,386 15,920 11,893 Total stock-based compensation $ 10,362 $ 8,322 $ 20,767 $ 15,308 |
Income Taxes
Income Taxes | 6 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company recorded income tax provisions of $0.9 million and $1.3 million representing effective income tax rates of (2.8)% and (3.7)% for the three and six months ended March 31, 2023, respectively, and $0.4 million and $0.7 million representing effective income tax rates of (4.7)% and (5.4)% for the three and six months ended March 31, 2022, respectively. The income tax provision for the three and six months ended March 31, 2023 and 2022 was primarily related to foreign taxes on the Company’s profitable foreign operations, foreign withholding taxes on dividends, and deferred taxes on goodwill resulting from the Acquisition. The Company elected to partially reinvest foreign earnings in certain foreign jurisdictions and expects to repatriate future foreign earnings in certain foreign jurisdictions over time. As a result, the Company will record a deferred tax liability for the additional non-U.S. taxes that are expected to be incurred related to the repatriation of these earnings. The Company elected to record global intangible low-taxed income (“GILTI”) as a period cost. The Company realized no benefit for current period losses due to maintaining a full valuation allowance against the U.S. net deferred tax assets. |
Net Loss per Share
Net Loss per Share | 6 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Net Loss per Share | Net Loss per Share The following table sets forth the computation of the basic and diluted net loss per share attributable to common stockholders during the periods presented (in thousands, except per share data): Three Months Ended March 31, Six Months Ended March 31, 2023 2022 2023 2022 Numerator Basic and diluted Net loss attributable to common stockholders $ (33,319) $ (8,039) $ (37,369) $ (14,305) Denominator Basic and diluted Weighted average shares used in computing net loss per share attributable to common stockholders 37,917 36,619 37,719 36,419 Net loss per share attributable to common stockholders: Basic and diluted $ (0.88) $ (0.22) $ (0.99) $ (0.39) Potentially dilutive securities that were not included in the calculation of diluted net loss per share because their effect would have been an anti-dilutive are as follows (in thousands): As of March 31, 2023 2022 Stock options 1 17 Performance-based RSUs and RSUs 2,658 2,270 Shares issuable pursuant to the employee stock purchase plan 74 86 Convertible senior notes 4 — Because the Convertible Senior Notes principal amount will always be settled in cash, the conversion spread has a dilutive impact on diluted net income per share of common stock when the average market price of the Company’s common stock for a given period exceeds the conversion price of $33.33 per share for the 2025 Notes and $43.04 per share for the 2028 Notes. The number of shares relating to convertible senior notes represents potentially dilutive securities relating to the conversion premium (if any) of Convertible Senior Notes outstanding as of period-end, calculated using the Company’s period-end common stock price. |
Litigation and Contingencies
Litigation and Contingencies | 6 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation and Contingencies | Litigation and Contingencies Legal Proceedings The Company is not currently a party to any pending material legal proceedings. From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. Regardless of outcome, litigation can have an adverse impact on the Company due to defense and settlement costs, diversion of management resources, negative publicity and reputational harm and other factors. |
Geographic Information
Geographic Information | 6 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Geographic Information | Geographic InformationThe Company has one operating segment with one business activity — developing and monetizing revenue management solutions. Revenues The Company disaggregates the revenues by geographic regions based on the bill to location of its customers. Revenues from customers outside of the United States were 5% of total revenues for the three and six months ended March 31, 2023, and 5% and 6% of total revenues for the three and six months ended March 31, 2022, respectively. Long-Lived Assets The following table sets forth the Company’s property and equipment, net, by geographic region (in thousands): As of March 31, 2023 As of September 30, 2022 United States $ 778 $ 1,113 India 644 725 Total property and equipment, net $ 1,422 $ 1,838 |
The Company and Significant A_2
The Company and Significant Accounting Policies and Estimates (Policies) | 6 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis for Presentation | Basis for Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The unaudited condensed consolidated balance sheet as of September 30, 2022 has been derived from the audited financial statements which are included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022 (the ‘Annual Report”) on file with the SEC. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Annual Report. In the opinion of management, the unaudited interim consolidated financial statements include all the normal recurring adjustments necessary to present fairly our condensed consolidated financial statements. The results of operations for the six months ended March 31, 2023 are not necessarily indicative of the operating results for the full fiscal year 2023 or any future periods. The condensed consolidated financial statements include the accounts of Model N and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities and reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates include revenue recognition, liability and equity allocation of convertible senior notes, legal contingencies, income taxes, stock-based compensation and valuation of goodwill and intangibles. These estimates and assumptions are based on management’s best estimates and judgment. Management regularly evaluates its estimates and assumptions using historical experience and other factors. However, actual results could differ significantly from these estimates. |
New Accounting Pronouncements | New Accounting Pronouncements Recently Adopted Accounting Guidance In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes, which removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years, and interim periods within those years, beginning after Recently Issued Accounting Pronouncements Not Yet Adopted In October 2021, the FASB issued Accounting Standards Update No. 2021-08, “Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”), which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured in accordance with ASC 606, Revenue from Contracts with Customers. ASU 2021-08 is effective for interim and annual periods beginning after December 15, 2022 on a prospective basis, with early adoption permitted. The Company does not anticipate the impact of the adoption of this standard to be material to its consolidated financial statements. Significant Accounting Policies |
Revenues from Contract with Customer | Accounts Receivable Accounts receivable represents the Company’s right to consideration that is unconditional, net of allowances for credit losses. The allowance for credit losses is based on management’s assessment of the collectability of accounts receivable amounts. Unbilled Accounts Receivable Unbilled accounts receivable consists of a receivable primarily for the revenue recognized for services performed but not yet billed. Contract Asset Contract asset represents revenue that has been recognized for satisfied performance obligations for which the Company does not have an unconditional right to consideration. Deferred Revenue Deferred revenue, which is a contract liability, consists of amounts that have been invoiced and for which the Company has the right to bill, but that have not been recognized as revenue because the related goods or services have not been transferred. Capitalized Contract Acquisition Costs The Company capitalizes incremental costs incurred to acquire contracts with customers, primarily sales commissions, for which the associated revenue is expected to be recognized in future periods. The Company incurs these costs in connection with both initial contracts and renewals. Such costs for renewals are not considered commensurate with those for initial contracts given the substantive difference in commission rates in proportion to their respective contract values. The costs in connection with initial contracts and renewals are deferred and amortized over an expected customer life of five years and over the renewal term, respectively, which corresponds to the period of benefit to the customer. The Company determined the period of benefit by considering the Company’s history of customer relationships, length of customer contracts, technological development and obsolescence, and other factors. The current and non-current portion of capitalized contract acquisition costs are included in other current assets and other assets on the condensed consolidated balance sheets. Amortization expense is included in sales and marketing expenses on the condensed consolidated statements of operations. Customer Deposits Customer deposits primarily relate to payments received from customers which could be refundable pursuant to the terms of the related arrangement. These amounts are included in accrued liabilities on the condensed consolidated balance sheets. Customer deposits were immaterial as of March 31, 2023 and September 30, 2022. Standard payment terms to customers generally range from thirty to ninety days; however, payment terms and conditions in our customer contracts may vary. In some cases, customers prepay for subscription and services in advance of the delivery; in other cases, payment is due as services are performed or in arrears following the delivery. Remaining Performance Obligations |
The Company and Significant A_3
The Company and Significant Accounting Policies and Estimates (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of accounting standards update and change in accounting principle | Balance at September 30, 2022 Adjustments from Adoption of ASU 2020-06 Balance at October 1, 2022 Liabilities Long term debt $ 135,417 $ 33,720 $ 169,137 Stockholders’ Equity Additional paid-in capital 421,473 (55,227) 366,246 Accumulated deficit (284,445) 21,507 (262,938) |
Revenues from Contracts with _2
Revenues from Contracts with Customers (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of customer contract balances | The following table reflects contract balances related to contracts with customers (in thousands): As of March 31, 2023 As of September 30, 2022 Accounts receivable, net $ 66,626 $ 35,095 Unbilled accounts receivable, net 9,395 14,026 Total accounts receivable, net $ 76,021 $ 49,121 Contract asset $ 2,773 $ 7,671 Deferred revenue $ 71,212 $ 62,649 Capitalized contract acquisition costs $ 12,308 $ 13,041 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Schedule of operating lease cost and cash flow information | Cash flow information related to operating leases is as follows (in thousands): Six Months Ended March 31, 2023 Six Months Ended March 31, 2022 Cash paid for amounts included in the measurement of operating lease liabilities $ 2,393 $ 2,540 Operating lease ROU assets obtained in exchange for new operating lease liabilities — — |
Schedule of maturities of operating lease liabilities | Maturities of operating lease liabilities as of March 31, 2023 are as follows (in thousands): Fiscal Year Remaining fiscal 2023 $ 2,463 2024 4,661 2025 4,296 2026 2,357 2027 276 2028 and thereafter — Total operating lease payments 14,053 Less imputed interest 552 Total operating lease liabilities $ 13,501 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value measured on recurring basis | The table below sets forth the Company’s marketable securities which are measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands): Reported as: Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents As of March 31, 2023 Level 1: Money market funds $ 103,328 $ — $ — $ 103,328 $ 103,328 US Treasury securities 34,979 8 — 34,987 34,987 Total $ 138,307 $ 8 $ — $ 138,315 $ 138,315 As of September 30, 2022 Level 1: Money market funds $ 61,956 $ — $ — $ 61,956 $ 61,956 US Treasury securities 89,679 11 (6) 89,684 89,684 Total $ 151,635 $ 11 $ (6) $ 151,640 $ 151,640 |
Goodwill, and Intangible Asse_2
Goodwill, and Intangible Assets (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | The following table summarizes the changes in the carrying amount of goodwill (in thousands): Balance at September 30, 2022 $ 65,665 Additions — Balance at March 31, 2023 $ 65,665 |
Schedule of intangible assets | Intangible assets consisted of the following (in thousands): Estimated As of March 31, 2023 Useful Life Gross Carrying Accumulated Net Carrying Intangible Assets: Customer relationships 3-15 $ 52,109 $ (25,980) $ 26,129 Developed technology 5-6 22,333 (15,927) 6,406 Non-compete agreements 5 1,600 (720) 880 Trade name 3 850 (637) 213 Total $ 76,892 $ (43,264) $ 33,628 Estimated As of September 30, 2022 Useful Life Gross Carrying Accumulated Net Carrying Intangible Assets: Customer relationships 3-15 $ 52,109 $ (23,684) $ 28,425 Developed technology 5-6 22,333 (14,790) 7,543 Non-compete agreements 5 1,600 (560) 1,040 Trade name 3 850 (496) 354 Total $ 76,892 $ (39,530) $ 37,362 |
Schedule of estimated future amortization expenses | Estimated future amortization expense for the intangible assets as of March 31, 2023 is as follows (in thousands): Fiscal Year Remaining fiscal 2023 $ 3,452 2024 6,691 2025 6,620 2026 6,069 2027 2,266 2028 and thereafter 8,530 Total future amortization $ 33,628 |
Cash, Cash Equivalents, and F_2
Cash, Cash Equivalents, and Funds Held for Customers (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Cash and Cash Equivalents [Abstract] | |
Schedule of restrictions on cash and cash equivalents | The table below reconciles the cash and cash equivalents and funds held for customers as reported on the condensed consolidated balance sheets to the cash and cash equivalents on the condensed consolidated statements of cash flows (in thousands): As of March 31, 2023 As of September 30, 2022 Cash and cash equivalents $ 270,643 $ 193,524 Funds held for customers 229 603 Total cash and cash equivalents $ 270,872 $ 194,127 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of debt | The net carrying amounts of the liability and equity components for the 2025 Notes were as follows (in thousands): As of March 31, 2023 As of September 30, 2022 Liability component: Principal amount $ 34,530 $ 172,500 Unamortized discount — (34,354) Unamortized issuance costs (552) (2,729) Net carrying amount $ 33,978 $ 135,417 Equity component, net of issuance costs $ — $ 55,227 The net carrying amounts of the liability for the 2028 Notes were as follows (in thousands): As of March 31, 2023 As of September 30, 2022 Liability component: Principal amount $ 253,000 $ — Unamortized issuance costs (7,501) — Net carrying amount $ 245,499 $ — The following table sets forth the interest expense recognized related to the Convertible Senior Notes (in thousands): Three Months Ended March 31, Six Months Ended March 31, 2023 2022 2023 2022 Coupon interest expense $ 1,181 $ 1,132 $ 2,313 $ 2,264 Amortization of debt discount — 2,575 — 5,079 Amortization of debt issuance costs 327 161 629 312 Total interest expense related to the Notes $ 1,508 $ 3,868 $ 2,942 $ 7,655 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Schedule of Stockholder's Equity | The following tables present the changes in the components of stockholders’ equity (in thousands): Three Months Ended March 31, 2023 Common Stock Additional Accumulated Accumulated Deficit Total Shares Amount Balance at December 31, 2022 37,734 $ 6 $ 381,733 $ (2,214) $ (266,988) $ 112,537 Issuance of common stock upon exercise of stock options 2 — 27 — — 27 Issuance of common stock upon release of restricted stock units 274 — — — — — Issuance of common stock upon ESPP purchase 96 — 2,500 — — 2,500 Stock-based compensation — — 10,362 — — 10,362 Other comprehensive income — — — 54 — 54 Net loss — — — — (33,319) (33,319) Balance at March 31, 2023 38,106 6 394,622 (2,160) (300,307) 92,161 Three Months Ended March 31, 2022 Common Stock Additional Accumulated Accumulated Deficit Total Shares Amount Balance at December 31, 2021 $ 36,433 $ 5 $ 393,278 $ (1,218) $ (262,076) $ 129,989 Issuance of common stock upon exercise of stock options — — 8 — — 8 Issuance of common stock upon release of restricted stock units 275 1 — — — 1 Issuance of common stock upon ESPP purchase 108 — 2,321 — — 2,321 Stock-based compensation — — 7,932 — — 7,932 Other comprehensive loss — — — (284) — (284) Net loss — — — — (8,039) (8,039) Balance at March 31, 2022 36,816 $ 6 $ 403,539 $ (1,502) $ (270,115) $ 131,928 Six Months Ended March 31, 2023 Common Stock Additional Accumulated Accumulated Deficit Total Shares Amount Balance at September 30, 2022 37,358 $ 6 $ 421,473 $ (2,413) $ (284,445) $ 134,621 Cumulative effect of ASU 2020-06 adoption — — (55,227) — 21,507 (33,720) Balance at October 1, 2022 37,358 6 366,246 (2,413) (262,938) 100,901 Issuance of common stock upon exercise of stock options 4 — 54 — — 54 Issuance of common stock upon release of restricted stock units 648 — — — — — Issuance of common stock upon ESPP purchase 96 — 2,500 — — 2,500 Stock-based compensation — — 25,822 — — 25,822 Other comprehensive income — — — 253 — 253 Net loss — — — — (37,369) (37,369) Balance at March 31, 2023 38,106 $ 6 $ 394,622 $ (2,160) $ (300,307) $ 92,161 Six Months Ended March 31, 2022 Common Stock Additional Accumulated Accumulated Deficit Total Shares Amount Balance at September 30, 2021 36,059 $ 5 $ 380,528 $ (1,205) $ (255,810) $ 123,518 Issuance of common stock upon exercise of stock options 8 — 80 — — 80 Issuance of common stock upon release of restricted stock units 641 1 — — — 1 Issuance of common stock upon ESPP purchase 108 — 2,321 — — 2,321 Stock-based compensation — — 20,610 — — 20,610 Other comprehensive loss — — — (297) — (297) Net loss — — — — (14,305) (14,305) Balance at March 31, 2022 36,816 $ 6 $ 403,539 $ (1,502) $ (270,115) $ 131,928 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of restricted stock unit activity (including performance based restricted stock units) under all equity award plans | The following table summarizes our RSU activity which includes performance-based RSUs under all equity plans for the six months ended March 31, 2023: Restricted Weighted Balance at September 30, 2022 2,055 $ 33.08 Granted 1,301 38.01 Released (648) 32.43 Forfeited (50) 32.01 Balance at March 31, 2023 2,658 $ 35.67 |
Schedule of stock-based compensation | Stock-based compensation recorded in the condensed consolidated statements of operations is as follows (in thousands): Three Months Ended March 31, Six Months Ended March 31, 2023 2022 2023 2022 Cost of revenues Subscription $ 1,307 $ 1,065 $ 2,644 $ 1,923 Professional services 1,063 871 2,203 1,492 Total stock-based compensation in cost of revenues 2,370 1,936 4,847 3,415 Operating expenses Research and development 1,831 1,509 3,653 2,790 Sales and marketing 2,561 1,826 4,949 3,446 General and administrative 3,600 3,051 7,318 5,657 Total stock-based compensation in operating expenses 7,992 6,386 15,920 11,893 Total stock-based compensation $ 10,362 $ 8,322 $ 20,767 $ 15,308 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Computation of basic and diluted net loss per share | The following table sets forth the computation of the basic and diluted net loss per share attributable to common stockholders during the periods presented (in thousands, except per share data): Three Months Ended March 31, Six Months Ended March 31, 2023 2022 2023 2022 Numerator Basic and diluted Net loss attributable to common stockholders $ (33,319) $ (8,039) $ (37,369) $ (14,305) Denominator Basic and diluted Weighted average shares used in computing net loss per share attributable to common stockholders 37,917 36,619 37,719 36,419 Net loss per share attributable to common stockholders: Basic and diluted $ (0.88) $ (0.22) $ (0.99) $ (0.39) |
Schedule of weighted average shares of common stock equivalents excluded from computation of diluted net loss per share attributable to common stockholders | Potentially dilutive securities that were not included in the calculation of diluted net loss per share because their effect would have been an anti-dilutive are as follows (in thousands): As of March 31, 2023 2022 Stock options 1 17 Performance-based RSUs and RSUs 2,658 2,270 Shares issuable pursuant to the employee stock purchase plan 74 86 Convertible senior notes 4 — |
Geographic Information (Tables)
Geographic Information (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Schedule of company's property and equipment, net by geographic region | The following table sets forth the Company’s property and equipment, net, by geographic region (in thousands): As of March 31, 2023 As of September 30, 2022 United States $ 778 $ 1,113 India 644 725 Total property and equipment, net $ 1,422 $ 1,838 |
The Company and Significant A_4
The Company and Significant Accounting Policies and Estimates (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Oct. 01, 2022 | Sep. 30, 2022 |
Liabilities | |||
Long term debt | $ 279,477 | $ 169,137 | $ 135,417 |
Stockholders’ equity | |||
Additional paid-in capital | 394,622 | 366,246 | 421,473 |
Accumulated deficit | $ (300,307) | $ (262,938) | (284,445) |
Cumulative Effect, Period of Adoption, Adjustment | |||
Liabilities | |||
Long term debt | 33,720 | ||
Stockholders’ equity | |||
Additional paid-in capital | (55,227) | ||
Accumulated deficit | $ 21,507 |
Revenues from Contracts with _3
Revenues from Contracts with Customers - Customer Contract Balances (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Sep. 30, 2022 |
Revenue from Contract with Customer [Abstract] | ||
Accounts receivable, net | $ 66,626 | $ 35,095 |
Unbilled accounts receivable, net | 9,395 | 14,026 |
Total accounts receivable, net | 76,021 | 49,121 |
Contract asset | 2,773 | 7,671 |
Deferred revenue | 71,212 | 62,649 |
Capitalized contract acquisition costs | $ 12,308 | $ 13,041 |
Revenues from Contracts with _4
Revenues from Contracts with Customers - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |||||
Revenue recognized that was included in deferred revenue at beginning of period | $ 28,400,000 | $ 26,900,000 | $ 45,800,000 | $ 40,900,000 | |
Amortized over expected customer life (in years) | 5 years | 5 years | |||
Capitalized contract acquisition costs, current portion | $ 4,400,000 | $ 4,400,000 | $ 4,400,000 | ||
Capitalized contract acquisition costs, non-current portion | 7,900,000 | 7,900,000 | $ 8,600,000 | ||
Amortization of capitalized contract acquisition costs | 1,200,000 | $ 1,000,000 | $ 2,416,000 | 2,027,000 | |
Impairment loss related to contract balances | $ 0 | $ 0 |
Revenues from Contracts with _5
Revenues from Contracts with Customers - Performance Obligation (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2023-04-01 $ in Millions | Mar. 31, 2023 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Performance obligations not satisfied or partially satisfied | $ 338.4 |
Remaining performance obligation, percentage | 43% |
Remaining performance obligation, expected timing of satisfaction (in months) | 12 months |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Lessee, Lease, Description | ||||
Operating lease cost for remaining term | $ 1.2 | $ 1.4 | $ 2.5 | $ 2.9 |
Weighted average remaining lease term (in years) | 3 years | 3 years | ||
Weighted average discount rate percent | 2.70% | 2.70% | ||
Minimum | ||||
Lessee, Lease, Description | ||||
Noncancelable operating leases term (in years) | 3 years | 3 years | ||
Maximum | ||||
Lessee, Lease, Description | ||||
Noncancelable operating leases term (in years) | 11 years | 11 years |
Leases - Cash Flow Information
Leases - Cash Flow Information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Leases [Abstract] | ||
Cash paid for amounts included in the measurement of operating lease liabilities | $ 2,393 | $ 2,540 |
Operating lease ROU assets obtained in exchange for new operating lease liabilities | $ 0 | $ 0 |
Leases - Maturities of Operatin
Leases - Maturities of Operating Lease Liabilities (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Fiscal Year | |
Remaining fiscal 2023 | $ 2,463 |
2024 | 4,661 |
2025 | 4,296 |
2026 | 2,357 |
2027 | 276 |
2028 and thereafter | 0 |
Total operating lease payments | 14,053 |
Less imputed interest | 552 |
Total operating lease liabilities | $ 13,501 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - Level 1 - Fair Value Measurement Recurring - USD ($) $ in Thousands | Mar. 31, 2023 | Sep. 30, 2022 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Amortized Cost | $ 138,307 | $ 151,635 |
Unrealized Gains | 8 | 11 |
Unrealized Losses | 0 | (6) |
Fair Value | 138,315 | 151,640 |
Cash and Cash Equivalents | 138,315 | 151,640 |
Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Amortized Cost | 103,328 | 61,956 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Fair Value | 103,328 | 61,956 |
Cash and Cash Equivalents | 103,328 | 61,956 |
US Treasury securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Amortized Cost | 34,979 | 89,679 |
Unrealized Gains | 8 | 11 |
Unrealized Losses | 0 | (6) |
Fair Value | 34,987 | 89,684 |
Cash and Cash Equivalents | $ 34,987 | $ 89,684 |
Goodwill, and Intangible Asse_3
Goodwill, and Intangible Assets - Schedule of Goodwill (Details) $ in Thousands | 6 Months Ended |
Mar. 31, 2023 USD ($) | |
Goodwill | |
Beginning balance | $ 65,665 |
Additions | 0 |
Ending balance | $ 65,665 |
Goodwill, and Intangible Asse_4
Goodwill, and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Sep. 30, 2022 | |
Acquired Finite-Lived Intangible Assets | ||
Gross Carrying Amount | $ 76,892 | $ 76,892 |
Accumulated Amortization | (43,264) | (39,530) |
Net Carrying Amount | 33,628 | 37,362 |
Customer relationships | ||
Acquired Finite-Lived Intangible Assets | ||
Gross Carrying Amount | 52,109 | 52,109 |
Accumulated Amortization | (25,980) | (23,684) |
Net Carrying Amount | $ 26,129 | $ 28,425 |
Customer relationships | Minimum | ||
Acquired Finite-Lived Intangible Assets | ||
Estimated Useful Life (in Years) | 3 years | 3 years |
Customer relationships | Maximum | ||
Acquired Finite-Lived Intangible Assets | ||
Estimated Useful Life (in Years) | 15 years | 15 years |
Developed technology | ||
Acquired Finite-Lived Intangible Assets | ||
Gross Carrying Amount | $ 22,333 | $ 22,333 |
Accumulated Amortization | (15,927) | (14,790) |
Net Carrying Amount | $ 6,406 | $ 7,543 |
Developed technology | Minimum | ||
Acquired Finite-Lived Intangible Assets | ||
Estimated Useful Life (in Years) | 5 years | 5 years |
Developed technology | Maximum | ||
Acquired Finite-Lived Intangible Assets | ||
Estimated Useful Life (in Years) | 6 years | 6 years |
Non-compete agreements | ||
Acquired Finite-Lived Intangible Assets | ||
Estimated Useful Life (in Years) | 5 years | 5 years |
Gross Carrying Amount | $ 1,600 | $ 1,600 |
Accumulated Amortization | (720) | (560) |
Net Carrying Amount | $ 880 | $ 1,040 |
Trade name | ||
Acquired Finite-Lived Intangible Assets | ||
Estimated Useful Life (in Years) | 3 years | 3 years |
Gross Carrying Amount | $ 850 | $ 850 |
Accumulated Amortization | (637) | (496) |
Net Carrying Amount | $ 213 | $ 354 |
Goodwill, and Intangible Asse_5
Goodwill, and Intangible Assets - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of intangible assets | $ 1.7 | $ 2 | $ 3.7 | $ 4 |
Goodwill, and Intangible Asse_6
Goodwill, and Intangible Assets - Schedule of Estimated Future Amortization Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Sep. 30, 2022 |
Fiscal Year | ||
Remaining fiscal 2023 | $ 3,452 | |
2024 | 6,691 | |
2025 | 6,620 | |
2026 | 6,069 | |
2027 | 2,266 | |
2028 and thereafter | 8,530 | |
Net Carrying Amount | $ 33,628 | $ 37,362 |
Cash, Cash Equivalents, and F_3
Cash, Cash Equivalents, and Funds Held for Customers (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Sep. 30, 2022 |
Cash and Cash Equivalents [Abstract] | ||
Cash and cash equivalents | $ 270,643 | $ 193,524 |
Funds held for customers | 229 | 603 |
Total cash and cash equivalents | $ 270,872 | $ 194,127 |
Derivative Instruments and He_2
Derivative Instruments and Hedging (Details) - Cash Flow Hedging - Foreign Currency Exchange Contracts - USD ($) $ in Millions | 6 Months Ended | |
Mar. 31, 2023 | Sep. 30, 2022 | |
Derivative | ||
Foreign exchange contract terms | 12 months | |
Notional amount | $ 0 | $ 4.3 |
Convertible Senior Notes - Narr
Convertible Senior Notes - Narrative (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2023 USD ($) d $ / shares | May 31, 2020 USD ($) d $ / shares | Mar. 31, 2023 USD ($) $ / shares | Mar. 31, 2022 USD ($) | Mar. 31, 2023 USD ($) $ / shares | Mar. 31, 2022 USD ($) | |
Debt Instrument | ||||||
Repayments of debt | $ 165,210,000 | $ 0 | ||||
Loss on extinguishment of debt | $ 29,493,000 | $ 0 | $ 29,493,000 | $ 0 | ||
Closing trading price (usd per share) | $ / shares | $ 100 | |||||
Convertible Debt | 2025 Notes | ||||||
Debt Instrument | ||||||
Aggregate principal amount | $ 172,500,000 | |||||
Debt instrument, interest rate (percent) | 2.625% | |||||
Purchase option value | $ 22,500,000 | |||||
Proceeds from issuance of debt | 166,400,000 | |||||
Debt issuance cost | $ 6,100,000 | |||||
Conversion rate | 0.0300044 | |||||
Initial conversion price (usd per share) | $ / shares | $ 33.33 | $ 33.33 | $ 33.33 | $ 33.33 | ||
Common stock for trading days | d | 20 | |||||
Consecutive trading days | d | 30 | |||||
Conversion threshold for trigger price (percent) | 130% | |||||
Measurement period (days) | 5 days | |||||
Minimum percentage of conversion price in the event of trigger event (percent) | 98% | |||||
Redemption price (percent) | 100% | |||||
Sinking fund | $ 0 | |||||
Carrying amount of equity component | $ 57,200,000 | |||||
Equity portion of debt issuance cost | $ 2,000,000 | $ 2,000,000 | $ 2,000,000 | |||
Effective interest rate (percentage) | 3.40% | 3.40% | 3.40% | |||
Amortized over period | 26 months | |||||
Convertible Debt | 2028 Notes | ||||||
Debt Instrument | ||||||
Aggregate principal amount | $ 253,000,000 | $ 253,000,000 | $ 253,000,000 | |||
Debt instrument, interest rate (percent) | 1.875% | 1.875% | 1.875% | |||
Purchase option value | $ 33,000,000 | $ 33,000,000 | $ 33,000,000 | |||
Proceeds from issuance of debt | 245,500,000 | |||||
Debt issuance cost | 7,600,000 | $ 7,600,000 | $ 7,600,000 | |||
Repayments of debt | $ 165,200,000 | |||||
Conversion rate | 0.0232364 | |||||
Initial conversion price (usd per share) | $ / shares | $ 43.04 | $ 43.04 | $ 43.04 | |||
Common stock for trading days | d | 20 | |||||
Consecutive trading days | d | 30 | |||||
Conversion threshold for trigger price (percent) | 130% | |||||
Measurement period (days) | 5 days | |||||
Minimum percentage of conversion price in the event of trigger event (percent) | 98% | 98% | 98% | |||
Redemption price (percent) | 100% | |||||
Sinking fund | $ 0 | |||||
Repurchase aggregate principal amount | 138,000,000 | $ 138,000,000 | $ 138,000,000 | |||
Loss on extinguishment of debt | 29,500,000 | |||||
Write off of debt issuance cost | 2,300,000 | |||||
Repurchase, remaining principal amount outstanding | $ 34,500,000 | $ 34,500,000 | $ 34,500,000 | |||
Effective interest rate (percentage) | 2.50% | 2.50% | 2.50% | |||
Amortized over period | 60 months | |||||
Convertible Debt | Maximum | 2025 Notes | ||||||
Debt Instrument | ||||||
Conversion rate | 0.0382555 | |||||
Convertible Debt | Maximum | 2028 Notes | ||||||
Debt Instrument | ||||||
Conversion rate | 0.0307881 | |||||
Convertible Debt | Estimate of Fair Value Measurement | 2025 Notes | ||||||
Debt Instrument | ||||||
Carrying amount of the liability component | $ 115,300,000 | |||||
Estimated fair value | $ 41,300,000 | $ 41,300,000 | $ 41,300,000 | |||
Convertible Debt | Estimate of Fair Value Measurement | 2028 Notes | ||||||
Debt Instrument | ||||||
Estimated fair value | 259,400,000 | 259,400,000 | 259,400,000 | |||
Convertible Debt | Interest Expense | 2025 Notes | ||||||
Debt Instrument | ||||||
Debt issuance cost | $ 4,100,000 | $ 4,100,000 | $ 4,100,000 | |||
Convertible Debt | On or After June 6, 2023 | 2025 Notes | ||||||
Debt Instrument | ||||||
Redemption price (percent) | 100% | |||||
Convertible Debt | On or After June 6, 2023 | 2028 Notes | ||||||
Debt Instrument | ||||||
Redemption price (percent) | 100% | |||||
Term Loan | Credit Agreement | ||||||
Debt Instrument | ||||||
Repayments of debt | $ 40,000,000 |
Convertible Senior Notes - Liab
Convertible Senior Notes - Liability and Equity Components (Details) - Convertible Debt - USD ($) $ in Thousands | Mar. 31, 2023 | Sep. 30, 2022 |
2025 Notes | ||
Liability component: | ||
Principal amount | $ 34,530 | $ 172,500 |
Unamortized discount | 0 | (34,354) |
Unamortized issuance costs | (552) | (2,729) |
Net carrying amount | 33,978 | 135,417 |
Equity component, net of issuance costs | 0 | 55,227 |
2028 Notes | ||
Liability component: | ||
Principal amount | 253,000 | 0 |
Unamortized issuance costs | (7,501) | 0 |
Net carrying amount | $ 245,499 | $ 0 |
Convertible Senior Notes - Inte
Convertible Senior Notes - Interest Expense Recognized (Details) - Convertible Debt - 2025 and 2028 Notes - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Debt Instrument | ||||
Coupon interest expense | $ 1,181 | $ 1,132 | $ 2,313 | $ 2,264 |
Amortization of debt discount | 0 | 2,575 | 0 | 5,079 |
Amortization of debt issuance costs | 327 | 161 | 629 | 312 |
Total interest expense related to the Notes | $ 1,508 | $ 3,868 | $ 2,942 | $ 7,655 |
Stockholders' Equity - Componen
Stockholders' Equity - Component of Stockholders' Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Sep. 30, 2022 | |
Increase (Decrease) in Stockholders' Equity | |||||
Balance at beginning of period (in shares) | 37,358,000 | ||||
Balance at beginning of period | $ 112,537 | $ 129,989 | $ 134,621 | $ 123,518 | $ 123,518 |
Issuance of common stock upon exercise of stock options | 27 | 8 | 54 | 80 | |
Issuance of common stock upon release of restricted stock units | 1 | 1 | |||
Issuance of common stock upon ESPP purchase | 2,500 | 2,321 | 2,500 | 2,321 | |
Stock-based compensation | 10,362 | 7,932 | 25,822 | 20,610 | |
Other comprehensive income (loss) | 54 | (284) | 253 | (297) | |
Net loss | $ (33,319) | (8,039) | $ (37,369) | (14,305) | |
Balance at end of period (in shares) | 38,106,000 | 38,106,000 | 37,358,000 | ||
Balance at end of period | $ 92,161 | $ 131,928 | $ 92,161 | $ 131,928 | $ 134,621 |
Accounting Standards Update | Accounting Standards Update 2020-06 [Member] | ||||
Cumulative Effect, Period of Adoption, Adjustment | |||||
Increase (Decrease) in Stockholders' Equity | |||||
Balance at beginning of period | (33,720) | ||||
Balance at end of period | $ (33,720) | ||||
Cumulative Effect, Period of Adoption, Adjusted Balance | |||||
Increase (Decrease) in Stockholders' Equity | |||||
Balance at beginning of period | $ 100,901 | ||||
Balance at end of period | $ 100,901 | ||||
Common Stock | |||||
Increase (Decrease) in Stockholders' Equity | |||||
Balance at beginning of period (in shares) | 37,734,000 | 36,433,000 | 37,358,000 | 36,059,000 | 36,059,000 |
Balance at beginning of period | $ 6 | $ 5 | $ 6 | $ 5 | $ 5 |
Issuance of common stock upon exercise of stock options (in shares) | 2,000 | 0 | 4,000 | 8,000 | |
Issuance of common stock upon release of restricted stock units (in shares) | 274,000 | 275,000 | 648,000 | 641,000 | |
Issuance of common stock upon release of restricted stock units | $ 1 | $ 1 | |||
Issuance of common stock upon ESPP purchase (in shares) | 96,000 | 108,000 | 96,000 | 108,000 | |
Balance at end of period (in shares) | 38,106,000 | 36,816,000 | 38,106,000 | 36,816,000 | 37,358,000 |
Balance at end of period | $ 6 | $ 6 | $ 6 | $ 6 | $ 6 |
Common Stock | Cumulative Effect, Period of Adoption, Adjusted Balance | |||||
Increase (Decrease) in Stockholders' Equity | |||||
Balance at beginning of period (in shares) | 37,358,000 | ||||
Balance at beginning of period | $ 6 | ||||
Balance at end of period (in shares) | 37,358,000 | ||||
Balance at end of period | $ 6 | ||||
Additional Paid-In Capital | |||||
Increase (Decrease) in Stockholders' Equity | |||||
Balance at beginning of period | 381,733 | 393,278 | 421,473 | 380,528 | 380,528 |
Issuance of common stock upon exercise of stock options | 27 | 8 | 54 | 80 | |
Issuance of common stock upon ESPP purchase | 2,500 | 2,321 | 2,500 | 2,321 | |
Stock-based compensation | 10,362 | 7,932 | 25,822 | 20,610 | |
Balance at end of period | 394,622 | 403,539 | 394,622 | 403,539 | 421,473 |
Additional Paid-In Capital | Cumulative Effect, Period of Adoption, Adjustment | |||||
Increase (Decrease) in Stockholders' Equity | |||||
Balance at beginning of period | (55,227) | ||||
Balance at end of period | (55,227) | ||||
Additional Paid-In Capital | Cumulative Effect, Period of Adoption, Adjusted Balance | |||||
Increase (Decrease) in Stockholders' Equity | |||||
Balance at beginning of period | 366,246 | ||||
Balance at end of period | 366,246 | ||||
Accumulated Other Comprehensive Loss | |||||
Increase (Decrease) in Stockholders' Equity | |||||
Balance at beginning of period | (2,214) | (1,218) | (2,413) | (1,205) | (1,205) |
Other comprehensive income (loss) | 54 | (284) | 253 | (297) | |
Balance at end of period | (2,160) | (1,502) | (2,160) | (1,502) | (2,413) |
Accumulated Other Comprehensive Loss | Cumulative Effect, Period of Adoption, Adjusted Balance | |||||
Increase (Decrease) in Stockholders' Equity | |||||
Balance at beginning of period | (2,413) | ||||
Balance at end of period | (2,413) | ||||
Accumulated Deficit | |||||
Increase (Decrease) in Stockholders' Equity | |||||
Balance at beginning of period | (266,988) | (262,076) | (284,445) | (255,810) | (255,810) |
Net loss | (33,319) | (8,039) | (37,369) | (14,305) | |
Balance at end of period | $ (300,307) | $ (270,115) | (300,307) | $ (270,115) | (284,445) |
Accumulated Deficit | Cumulative Effect, Period of Adoption, Adjustment | |||||
Increase (Decrease) in Stockholders' Equity | |||||
Balance at beginning of period | 21,507 | ||||
Balance at end of period | 21,507 | ||||
Accumulated Deficit | Cumulative Effect, Period of Adoption, Adjusted Balance | |||||
Increase (Decrease) in Stockholders' Equity | |||||
Balance at beginning of period | $ (262,938) | ||||
Balance at end of period | $ (262,938) |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) - USD ($) $ in Millions | 6 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Equity [Abstract] | ||
Additional paid in capital, restricted stock unit grants, portion of bonus recorded as stock-based compensation | $ 5.1 | $ 5.4 |
Stock-based Compensation - Narr
Stock-based Compensation - Narrative (Details) shares in Millions | Mar. 31, 2023 shares |
Share-Based Payment Arrangement [Abstract] | |
Approved stock reserved for future issuance (in shares) | 4.4 |
Stock-based Compensation - Summ
Stock-based Compensation - Summary of Restricted Stock Unit Activity (Including Performance Based Restricted Stock Awards) Under All Equity Award Plans (Details) - Restricted Stock Units shares in Thousands | 6 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Restricted Stock Units Outstanding | |
Balance at beginning of period (in shares) | shares | 2,055 |
Granted (in shares) | shares | 1,301 |
Released (in shares) | shares | (648) |
Forfeited (in shares) | shares | (50) |
Balance at end of period (in shares) | shares | 2,658 |
Weighted Average Grant Date Fair Value | |
Balance at beginning of period (in dollars per share) | $ / shares | $ 33.08 |
Granted (in dollars per share) | $ / shares | 38.01 |
Released (in dollars per share) | $ / shares | 32.43 |
Forfeited (in dollars per share) | $ / shares | 32.01 |
Balance at end of period (in dollars per share) | $ / shares | $ 35.67 |
Stock-based Compensation - Su_2
Stock-based Compensation - Summary of Allocated Stock-based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Stock-based compensation | $ 10,362 | $ 8,322 | $ 20,767 | $ 15,308 |
Total stock-based compensation in cost of revenues | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Stock-based compensation | 2,370 | 1,936 | 4,847 | 3,415 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Stock-based compensation | 1,831 | 1,509 | 3,653 | 2,790 |
Sales and marketing | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Stock-based compensation | 2,561 | 1,826 | 4,949 | 3,446 |
General and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Stock-based compensation | 3,600 | 3,051 | 7,318 | 5,657 |
Total stock-based compensation in operating expenses | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Stock-based compensation | 7,992 | 6,386 | 15,920 | 11,893 |
Subscription | Total stock-based compensation in cost of revenues | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Stock-based compensation | 1,307 | 1,065 | 2,644 | 1,923 |
Professional services | Total stock-based compensation in cost of revenues | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Stock-based compensation | $ 1,063 | $ 871 | $ 2,203 | $ 1,492 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Income tax provision | $ 902,000 | $ 360,000 | $ 1,334,000 | $ 734,000 |
Effective income tax expense, rate | 2.80% | 4.70% | 3.70% | 5.40% |
Benefit realized for current period losses | $ 0 | $ 0 |
Net Loss per Share - Computatio
Net Loss per Share - Computation of Basic and Diluted Net Loss per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Numerator | ||||
Net loss attributable to common stockholders, basic | $ (33,319) | $ (8,039) | $ (37,369) | $ (14,305) |
Net loss attributable to common stockholders, diluted | $ (33,319) | $ (8,039) | $ (37,369) | $ (14,305) |
Denominator | ||||
Weighted average shares used in computing net loss per share attributable to common stockholders, basic (in shares) | 37,917 | 36,619 | 37,719 | 36,419 |
Weighted average shares used in computing net loss per share attributable to common stockholders, diluted (in shares) | 37,917 | 36,619 | 37,719 | 36,419 |
Net loss per share attributable to common stockholders: | ||||
Basic (in dollars per share) | $ (0.88) | $ (0.22) | $ (0.99) | $ (0.39) |
Diluted (in dollars per share) | $ (0.88) | $ (0.22) | $ (0.99) | $ (0.39) |
Net Loss per Share - Summary of
Net Loss per Share - Summary of Weighted Average Shares of Common Stock Equivalents Excluded from Computation of Diluted Net Loss per Share Attributable to Common Stockholders (Details) - shares shares in Thousands | 6 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Antidilutive securities excluded from computation of earnings per share amount (in shares) | 1 | 17 |
Performance-based RSUs and RSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Antidilutive securities excluded from computation of earnings per share amount (in shares) | 2,658 | 2,270 |
Shares issuable pursuant to the employee stock purchase plan | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Antidilutive securities excluded from computation of earnings per share amount (in shares) | 74 | 86 |
Convertible senior notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Antidilutive securities excluded from computation of earnings per share amount (in shares) | 4 | 0 |
Net Loss per Share - Narrative
Net Loss per Share - Narrative (Details) - Convertible Debt - $ / shares | Mar. 31, 2023 | May 31, 2020 |
2025 Notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Conversion price (usd per share) | $ 33.33 | $ 33.33 |
2028 Notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Conversion price (usd per share) | $ 43.04 |
Geographic Information - Narrat
Geographic Information - Narrative (Details) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 business segment | Mar. 31, 2022 | |
Segment Reporting Information | ||||
Number of operating segment | segment | 1 | |||
Number of business activity | business | 1 | |||
Outside of United States | Revenue | Geographic concentration risk | ||||
Segment Reporting Information | ||||
Revenues from customers outside United States | 5% | 5% | 5% | 6% |
Geographic Information - Compan
Geographic Information - Company's Property and Equipment, Net by Geographic Region (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Sep. 30, 2022 |
Geographic Areas, Long-Lived Assets | ||
Total property and equipment, net | $ 1,422 | $ 1,838 |
United States | ||
Geographic Areas, Long-Lived Assets | ||
Total property and equipment, net | 778 | 1,113 |
India | ||
Geographic Areas, Long-Lived Assets | ||
Total property and equipment, net | $ 644 | $ 725 |